By LINDA TRAINOR
Contributing Editor, Best Practices in HR

Key Issue: The potential threat of unionization does not support an employer's decision to change its business policy/predictions in order to terminate union sympathizers.

The Case: Huck Store Fixture Company v. National Labor Relations Board, 7th Circuit Court of Appeals, Nos. 01-2418, 01-2857 (2003)

Huck Store manufactures and sells fixtures used in retail stores. Soon after opening, the company had to scramble to meet unexpected market demand. The production workforce rapidly grew from 15 to 185. Some employees were hired as full-time employees directly by the company. Some were hired through a temporary staffing service.

Slightly over a year after opening its doors, Huck's president assembled a meeting of the company's managers and employees. He explained that new orders for Huck Store products had "built up quicker than he had anticipated," and the company's outlook for the coming year was good. Then senior management met with the company's major customers to confirm their orders for the year. While one customer indicated that its order would probably be reduced somewhat, the company's business outlook was not significantly changed from the information provided at the management/employee meeting.

Meanwhile, Huck Store workers had begun to engage in unionization activities. Some employees attended two informational meetings conducted by the Mid-Central Illinois District Council of Carpenters union. At a third meeting, some employees signed union authorization cards, and an "organizational committee comprised of seven Huck Store workers was also formed."

When the company learned of the unionization activity, the president again assembled employees and dramatically explained that management was strongly opposed to the organizing effort and encouraged employees to ask for their union authorization cards back and tear them up. He also emphasized that he had treated the workers "fairly and with open door policy." Even though the president allegedly instructed supervisors that they were not to interrogate workers regarding union activities, a number of interrogation, surveillance, and coercive incidents initiated by several supervisors raised serious doubts as to the credibility of his claim.

Meanwhile, within a week of his second employee meeting, the president and other senior managers determined that the company needed to implement a reduction in force because it had "built up excess inventory." An unscheduled performance evaluation was conducted to determine "which employees would be laid off or terminated." Based on the evaluation results, the company discharged a number of company-hired and temp employees, many of whom were union sympathizers. At the same time, it hired several other temp employees for permanent positions and later granted wage increases to 30 remaining employees.

The union filed an unfair labor practice charge, and the NLRB administrative law judge found against the company, saying that it violated the NLRA by interrogating and threatening employees in connection with their union activities and laying off 33 employees because of anti-union bias. Huck appealed, arguing that its workforce reduction action was a legitimate business need. The 7th Circuit upheld the NLRB decision.

Interestingly, Huck Store didn't dispute NLRB's finding that its supervisors participated in several anti-union activities, including circulating anti-union petitions and threatening physical harm to union supporters. However, it did argue that the layoffs were lawful. The NLRB discounted the company's "business needs" explanation as not credible because the business outlook at the time the workforce reduction decision was made was not substantially different from the "good" outlook the president communicated to employees only a month earlier.

The 7th Circuit Court of Appeals agreed with the NLRB, saying: "As the Board rightly noted, Huck Store's decision to reduce its workforce was made less than a week after the management became aware of its workers' efforts to unionize. The timing of the decision, so closely correlated with the commencement of union-related activities at the Company, renders suspect Huck Store's claim that the decision was purely based on economic factors."